S&P rates Renk, notes B

S&P said it assigned preliminary B ratings to Renk AG, being acquired through Rebecca Bidco GmbH, and its planned €300 million of secured senior notes. The preliminary recovery rating is 3.

In addition to the notes, Renk plans a €50 million revolving credit facility, super senior to the notes, and a €167.5 million super-senior guarantee facility.

Proceeds and equity from private equity firm Triton will be used to acquire a 76% stake in Renk.

“After the transaction, we forecast S&P Global Ratings-adjusted debt to EBITDA for 2020 will be about 4.7x. We include as debt a €40 million shareholder loan with a two-year maturity that we expect will be repaid in 2022. At the same time, we forecast funds from operations (FFO) to debt of about 11%-12%,” S&P said in a press release.

The outlook is stable. “The stable outlook reflects our expectation that Renk will increase its revenue and gradually improve profitability, with adjusted EBITDA margins of 13% or more in 2020 and 2021, and adjusted debt to EBITDA of about 4.7x,” the agency said.

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